France wants EDF to sell more nuclear power to rivals, price could increase

PARIS (Reuters) - The French government plans to increase the amount of nuclear energy utility EDF is forced to sell to its competitors by 50 percent to 150 terawatt hours and is in talks with the European Commission to potentially raise the fixed price.

FILE PHOTO: The logo of EDF (Electricite de France) is seen on the French state-controlled utility EDF's headquarters in Paris, France, February 15, 2019. REUTERS/Charles Platiau

The government aims to have both measures ready before the November auction window of the so-called ARENH market mechanism, under which EDF’s rivals bid for wholesale nuclear electricity for the year ahead, the energy ministry said.

“If we want power prices to be contained in 2020, we need to increase the ceiling and it is the wish of the government to move quickly on those two measure before the November auction window,” an official of the energy ministry told journalists.

“There would likely be a slight increase in the fixed price”, the official added.

The EU’s executive arm, which regulates market competition in the bloc would have to approve any change in the fixed wholesale nuclear price.

The ARENH mechanism was set up in 2010 following the liberalisation of the French power market to boost competition by giving smaller rivals access to France’s cheap nuclear electricity generated by its 58 reactors operated by EDF.

After wholesale electricity prices rose sharply last year, the demand from the ARENH window surged as alternative suppliers sought to buy more nuclear electricity at the fixed price of 42 euros per megawatt (MWh) hour compared with the average wholesale market price of 54.8 euros/MWh in 2018.

EDF’s nuclear generation stood at 393.2 TWh last year and it is targeting 395 TWh in 2019.

The company has repeatedly said the ARENH price is too low and too advantageous for its competitors, which have built little power generation capacity of their own, and wants the mechanism scrapped or the price increased.

EDF’s rivals in the French power market, such as Total, Engie, Uniper and Eni, had asked the government to raise the ARENH ceiling to at least 200 TWh.

The ARENH mechanism is expected to end in 2025. The energy ministry official said the government was working with the Commission for a long-term mechanism which would continue to guarantee competition in the French power market.

The energy bill which will be presented in plenary on Tuesday, is also expected to approve the government’s plan to close down France’s remaining coal power plants in line with its objective of curbing carbon emissions from the energy sector.